Feb. 8 (Bloomberg) -- Facebook Inc., the world’s most-used
social networking service, is moving its headquarters to Sun
Microsystems Inc.’s former campus in Menlo Park, California, in
the area’s biggest office leasing deal in two decades.

The company plans to relocate from nearby Palo Alto
starting in mid-June, Chief Financial Officer David Ebersman
said at an event today. Facebook will rent the space from
Deutsche Bank AG’s RREEF, which said it purchased the 57-acre
property from Sun Microsystems owner Oracle Corp. Financial
terms of the deals weren’t disclosed.

The agreement for about 1 million square feet (92,900
square meters) is the largest lease for Silicon Valley since
Apple Inc. signed an 865,000-square-foot deal in 1991, according
to the Cassidy Turley CPS commercial brokerage. The office
market is “transitioning to recovery mode” as vacancies remain
above 20 percent, the firm’s fourth-quarter report said.

“This is a localized phenomenon,” Gregory Davies, vice
president in the broker’s Santa Clara office, said of Facebook’s
agreement. “The market is not back.”

Silicon Valley’s vacancy rate may end the year at 21
percent after reaching 24 percent at the end of 2010, according
to Cassidy Turley CPS. The only office submarkets with vacancy
below 10 percent are Palo Alto, Cupertino and Mountain View,
where Facebook, Apple and Google Inc., respectively, are based.

The new home of Facebook has nine buildings and was
constructed from 1993 to 1995 for Sun Microsystems, RREEF, which
bought the property on behalf of an institutional client, said
in a statement today. Oracle acquired Sun last year.

Menlo Park Amenities

“We were attracted to the campus that Sun had built, to the
location in Menlo Park that had central accessibility from
around the Bay Area, to the local amenities, and extremely
attracted to all the support that we got from local officials,”
Facebook’s Ebersman said.

The company, which has more than 500 million users, will
likely increase its workforce by 50 percent a year, Ebersman
said. Facebook has more than 2,000 employees -- including 1,400
in Palo Alto -- up from a total of about 1,000 in August 2009,
according to its website.

The campus can accommodate about 3,600 employees, said
Steve Berkman, real estate partner with law firm Paul, Hastings,
Janofsky & Walker LLP, which advised Facebook on the deal.

Facebook has the option to buy the property in five years,
Ebersman said. The company also bought an adjacent 22-acre
property, connected to the new site by a tunnel, for future
development.

Menlo Park City Manager Glen Rojas said last week that city
officials have been talking with Facebook on zoning rules and
development of the area.

The company said it will continue to occupy its offices in
Palo Alto through this year and possibly into 2012. They include
265,000 square feet on Page Mill Road and 137,000 square feet on
South California Avenue, according to Cassidy Turley CPS.
Facebook moved there in May 2009.